I’ve just received a letter from the Vaud tax office, asking me to provide a “relevé détaillé de l’évolution de votre fortune” (detailed extract of the evolution of your wealth) for 2023, to justify why our wealth increased this year.
They don’t mention what kind of document is needed. Has anyone any idea what is it they could want ?
Our (married) wealth has increased of +100k CHF from the beginning to the end of 2023. Our cumulated income is around 240k (brutto) and we’re quite frugal. We didn’t do anything super special, just cared about maintaining a good saving rate, and invested what’s left at the end of the month in VT.
I could send them some pdf version of our expense tracking, or just all bank extracts + IBKR reports ?
I guess I’ll call them to check, but if any of you has some experience with this, I’d be glad to read about it.
Maybe this year was out of the ordinary? Did you significantly change your savings or savings rate by spending less or spending the same but earning more?
Yeah, I would call them too. But if I remember correctly it is on them to disprove any claim you make.
Did you not file your tax return yet ?
All the things you are saying should be part of your tax return already. I am a bit confused why are they asking you to explain something you have already explained
I would suggest to call them to ensure that the letter you have received is a legit letter and not some scam
This is mostly to prevent/catch situations where people receive large gifts and forget to declare them. A rough explanation should be enough, at least for a start.
Maybe they want to double-check whether you have any hidden income or inheritance. Walk back in there (write a mail), and tell the risk assessors very calmly, very politely that it’s a mix of additional savings plus market returns on your stock portfolio.
I filed my tax return already (long in advance). This year was not really extraordinary, just that my wife started a well paid job mid-2022, so 2023 was our first year with two good full-time incomes. And since for 80% of the year we were living in the same flat, our spendings didn’t increase much while our income did.
Also, I started investing (VT & chill) in late 2020/early 2021, so in 2023 I’ve reached an amount of money invested that generates significant (in regard with my income) changes when the market goes up or down. Nothing fancy, I only finished the year with ~60k CHF on the stock market, but since VT gained ~15% in 2023, it adds up a bit.
Also on the letter they don’t really mention an explanation per se, i.e. there’s no email, they just give me a link so I can upload documents on their online platform. But which documents, that’s the question…
Very interesting. It’s first time I heard something like this. Someone reviewing your tax return should be able to do this analysis very easily.
Evolution = total income + unrealised / realised capital gains - Tax paid - expected expenditure for family of 2
If you have declared all of this correctly, then I guess you simply just repeat this to them. Just double check on your return that you have not forgotten to mention your wife’s income.
But as said earlier, please ensure this is legit communication and not a scam to get hold of your information. I know I might sound crazy but there are lot of scams these days
They asked me the same things a few years ago because my taxable wealth went significantly down and I closed some banks accounts that previously had money on them. I basically responded with a screenshot of an excel sheet where I listed the most importants facts with the corresponding impact in CHF (a tax debt that was not known/declared the previous year and the buy of extra shares in real estate funds with tax advantages etc).
That is quite a normal question, but also something of a warning signal I suggest you take seriously. They are trying to ensure that you have declared all income. If you ignore them or don’t provide satisfactory explanations, they will simply assume such income and tax you on it. You then have to object that assessment and go the legal route.
I suspect you failed their automatic test. They take the net income and deduct everything you declared in the tax declaration (e.g. work-related expenses and spend on education, insurance premiums, buy-ins into pillars 2 and 3a), which gives you the freely available income. They then deduct an amount that they consider is needed for basic expenses with a frugal lifestyle (how much is not publicly known and varies by canton), and if the result is negative, it triggers this investigation.
If what you describe is correct, I suspect you just need to explain to them that you live more frugal than they assume, and that you also had some unrealized gains on your investments. Make a small table starting at your net income and ending at the 100k in savings and give them that.
Thanks for the replies. It’s definitely not a scam, quite genuine typical tax office, good IDs on them, links to their own platform.
What’s weird to me is that with 240k income and some money invested (they know exactly how much as I declared all of the dividends), 100k increase in wealth doesn’t seem so extraordinary. We’ve clearly indicated our incomes so they have this information.
I’ll try to be precise, but I’d prefer some simple email communication than having to upload some untold document to their platform.
Also had such question from the tax office; I had huge savings, the stock market performed well and I did not have exensive holidays that year.
The just simply asked if I received a gift or an inheritance, and I confirmed with a written statement (via e-mail), that these were my savings and gains from the stock market, only.
This is an interesting topic… I am expecting also they will ask me at some point this kind of questions too as my savings rate have increased considerably.
I am wondering in which circumstances they can ask a bunch of details like all bank transfers from the year from all your accounts,… ?
Also… the tax office already receive informatiom about your bank accounts, right? so they know how much you have received / expend and if this information do not match your tax declaration then this may turn on the alerts. Is that right and possible?
Exactly, they have all the information about salaries, bank accounts, even brokerage account and stock portfolio.
Our saving rate is above average (in regards with the rest of the population, not this forum) but it’s about 40-45%, it’s not extremely high either, so I can’t understand what is so extraordinary with our situation that they query us like this.
Maybe just because we started our FI journey in 2021, and reported close to no wealth for many years before that… Now it’s growing, perhaps it’s already surprising enough for the tax office.
By default they only have what you give them for domestic accounts.
For foreign accounts there’s automatic data sharing, but I assume it’s limited to balances and doesn’t include transactions. (Tho I never checked what was actually included).
I got this question the last 2 years (same canton). With a high saving rate (even 45%), you are out of the norm.
I have always justify with the high return on stock and crypto. They are waiting a realistic explanation.
I think this question is mostly to double check and for the future to prove that it was not a mistake from your side filling the tax report. They will also be to use that in the future in case of fraud.
Yes indeed, the proceeds from sale of assets is an important one for CH tax authorities as this allow them to know whether you are trading a lot / cached out a big capital gain abroad as you don’t have to declare individual transactions.
Beginning to invest in 2020 (your change of habits!)
Reasonable explanations.
If your wealth increased from income (employment and investment income/interest) and capital gains, that what you prove in detail. So I‘d provide them with…
a very brief explanation about wife‘s new job, similar spending and beginning investing („why“)
proof of employment income (you likely already included salary certificates with your tax return)
proof of investment income & capital gains (e.g. brokerage statement with transactions for 2023)
a friendly closing that they should contact you if they have got questions / require more
It‘s more likely you were (semi-) automatically flagged by hitting a predetermined threshold in a computer system than that they‘re out „to get you“.
What you want is to make it easy for them to close the case.
So do provide the numbers and documents as proof again - even if already included in your tax filing.
But don‘t overcomplicate with spreadsheets etc. (for the time being).
Totally agreed with this comment.
I also think as the crypto market cap is increasing , there is a crackdown to ensure people are not hiding their crypto assets.
Not saying it’s your case @EdgyTwinkle . But I am sure not everyone discloses their all assets but some might pay their expenses using those assets. This would make their expense (as per tax reporting) look low versus reality
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What you want is to make it easy for them to close the case.